Michael Ripley says there is a ‘glaring lacuna’ for indirect tax appeals
The time limits for appealing against a decision by HMRC are potentially restrictive. The usual rule is that the appeal must be brought within 30 days of the date of the document notifying the decision. And the FTT has refused to give permission to appeal late in a number of recent cases.
Despite the strictness of the rule, there is a glaring lacuna for indirect tax appeals which has been highlighted by the recent case of Scanwell Freight Services Ltd v HMRC [2014] UKFTT 106 (TC). That case concerned an appeal against import VAT which was brought more than two years after the appealable decision. An experienced FTT allowed the appeal to proceed, noting that the legislation operated anomalously.
The anomaly arises in respect of taxpayers who do not take up HMRC’s offer of a review within the normal time limits and instead, sometime later, request a review out of time. The key point is that even if HMRC refuses to review its decision out of time, the legislation still gives the taxpayer 30 days to appeal from the date of refusal and no permission is required.
HMRC may refuse to review a decision out of time if it is not satisfied that the taxpayer has a reasonable excuse or that there has been no unreasonable delay. By contrast, it appears that a taxpayer with no reasonable excuse for an extensive delay can refresh the time limit for appealing, simply by the administrative step of requesting a review.
The FTT naturally expressed its conclusion tentatively, noting the stark difference in treatment between a taxpayer who appeals late to the FTT, compared with a taxpayer in the same position who first requests a review from HMRC. However, the legislation is clear and, apparently unknown to the FTT, its reasoning is supported by the earlier case of London Cellular Accessories Ltd v HMRC [2012] UKFTT 583 (TC).
Although Scanwell Freight Services was concerned with FA 1994 s 16, which applies to customs and excise appeals, exactly the same considerations apply to most indirect taxes, including VAT, aggregates levy, landfill tax, CCL and IPT (but not SDLT). It is surprising to think that Data Select Ltd v HMRC [2012] UKUT 187 (TCC) (one of the lead cases refusing to allow an appeal out of time) might have had a very different outcome if only the taxpayer had requested a review out of time before appealing.
In my view, this is not a case where a ‘purposive’ or ‘rectifying’ interpretation is appropriate or possible to resolve this legislative anomaly; the structure and wording of the legislation are clear and supported by extra-statutory materials like the explanatory memorandum. If the words are to be ‘corrected’, then Parliament must do it (and it has several enactments to amend). In the meantime, taxpayers who wish to appeal an indirect tax decision (excluding SDLT) made any time since 1 April 2009 and who have not yet asked for a review, are still in time to appeal.
Home >Articles > Time waits for no taxpayer – unless they request a review out of time
Time waits for no taxpayer – unless they request a review out of time
Michael Ripley says there is a ‘glaring lacuna’ for indirect tax appeals
The time limits for appealing against a decision by HMRC are potentially restrictive. The usual rule is that the appeal must be brought within 30 days of the date of the document notifying the decision. And the FTT has refused to give permission to appeal late in a number of recent cases.
Despite the strictness of the rule, there is a glaring lacuna for indirect tax appeals which has been highlighted by the recent case of Scanwell Freight Services Ltd v HMRC [2014] UKFTT 106 (TC). That case concerned an appeal against import VAT which was brought more than two years after the appealable decision. An experienced FTT allowed the appeal to proceed, noting that the legislation operated anomalously.
The anomaly arises in respect of taxpayers who do not take up HMRC’s offer of a review within the normal time limits and instead, sometime later, request a review out of time. The key point is that even if HMRC refuses to review its decision out of time, the legislation still gives the taxpayer 30 days to appeal from the date of refusal and no permission is required.
HMRC may refuse to review a decision out of time if it is not satisfied that the taxpayer has a reasonable excuse or that there has been no unreasonable delay. By contrast, it appears that a taxpayer with no reasonable excuse for an extensive delay can refresh the time limit for appealing, simply by the administrative step of requesting a review.
The FTT naturally expressed its conclusion tentatively, noting the stark difference in treatment between a taxpayer who appeals late to the FTT, compared with a taxpayer in the same position who first requests a review from HMRC. However, the legislation is clear and, apparently unknown to the FTT, its reasoning is supported by the earlier case of London Cellular Accessories Ltd v HMRC [2012] UKFTT 583 (TC).
Although Scanwell Freight Services was concerned with FA 1994 s 16, which applies to customs and excise appeals, exactly the same considerations apply to most indirect taxes, including VAT, aggregates levy, landfill tax, CCL and IPT (but not SDLT). It is surprising to think that Data Select Ltd v HMRC [2012] UKUT 187 (TCC) (one of the lead cases refusing to allow an appeal out of time) might have had a very different outcome if only the taxpayer had requested a review out of time before appealing.
In my view, this is not a case where a ‘purposive’ or ‘rectifying’ interpretation is appropriate or possible to resolve this legislative anomaly; the structure and wording of the legislation are clear and supported by extra-statutory materials like the explanatory memorandum. If the words are to be ‘corrected’, then Parliament must do it (and it has several enactments to amend). In the meantime, taxpayers who wish to appeal an indirect tax decision (excluding SDLT) made any time since 1 April 2009 and who have not yet asked for a review, are still in time to appeal.
